📊 MSCI: More than just indices - the secret data king of the financial markets 👑

MSCI Inc. is a leading global provider of equity, bond and real estate indices as well as multi-asset portfolio analysis tools. The company also offers innovative ESG and climate products that enable institutional investors to develop sustainable investment strategies. Founded in 1968 and headquartered in New York City, the company has $MSCI (-0.07%) has established itself as an indispensable partner for capital markets and asset managers worldwide.

Historical development

The origins of MSCI date back to 1968, when Capital International first published global equity indices for non-US markets. In 1986, Morgan Stanley secured the license rights and coined the name Morgan Stanley Capital International (MSCI). With the acquisition of Barra in 2004, MSCI added analytical tools to its portfolio. The IPO in 2007 marked a further milestone, which was completed in 2009 with the full spin-off of $MS (+0.05%) Stanley in 2009.

Business model and core competencies

MSCI's business model rests on four central pillars:

1. index segment : development and licensing of globally recognized equity indices, including the MSCI World and MSCI Emerging Markets.

2. analytical segment: provision of sophisticated portfolio analysis tools used primarily by asset managers and hedge funds.

3. ESG segment: MSCI is a pioneer in sustainable investing and provides comprehensive ESG analysis to support environmental and socially responsible investment strategies.

4. private assets: diversification into unlisted assets, in particular real estate and private equity.

MSCI's core competence lies in the development of global indices that offer investors a comprehensive representation of opportunities and risks across different sectors and countries. A key competitive advantage is decades of data collection, which is crucial for strategy development, portfolio management and risk analysis.

Market position and competition

MSCI has established itself as one of the global market leaders in financial indices and acts neutrally towards regulatory authorities worldwide. This independence has enabled the company to generate 17% of its revenue in the Asia-Pacific region - a significant advantage over competitors such as $SPGI (-0.24%) which only achieve a share of less than 3% in this region.

Future prospects and strategic initiatives

MSCI's future strategy is characterized by continuous innovation and expansion.

1. ESG and climate products: The acquisition of Carbon Delta in 2019 strengthened MSCI's position in climate risk analytics and sustainability.

2. private asset segment: Through acquisitions such as Real Capital Analytics (2021) and Burgiss Group (2023), MSCI is expanding its expertise in unlisted assets

3. options: A cooperation with Cboe Global Markets since 2021 opens up new opportunities in options trading on MSCI indices.

4. fixed income indices: The development of new bond indices in collaboration with MarketAxess (2022) demonstrates MSCI's efforts to gain a stronger foothold in the fixed income space.

Total Addressable Market (TAM) and equity performance

The total market that MSCI addresses is enormous: over 13 trillion US dollars are invested worldwide in funds based on MSCI indices. The company continuously generates income through license fees of 0.02 to 0.04 percent of assets under management.

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Conclusion

MSCI's business model may seem simple at first glance, especially because it is easy to imitate, but it is not that simple. MSCI has established a strong brand with high recognition value, even among retail providers, and enjoys excellent relationships with asset managers. In addition, the company benefits from an extremely attractive business model, with high profitability, impressive scaling synergies and a promising trend. Revenues are recurring and therefore highly predictable and MSCI has successfully positioned itself in all markets, which is also reflected in an attractive revenue distribution. Capital efficiencies have been at a first-class level for some time and there are therefore few negative aspects, apart from the high level of debt, which at the same time offers leverage and a high valuation. Anyone who can acquire the shares at a lower price after a small crash should definitely buy them, as the company is a real cash machine if managed correctly.